Sect. VIII.—: Banking in Ireland.

“In no country, perhaps,” says Sir Henry Parnell, “has the issuing of paper money been carried to such an injurious excess as in Ireland. A national bank was established in 1783, with similar privileges to those of the Bank of England, in respect to the restriction of more than six partners in a bank; and the injury that Ireland has sustained from the repeated failure of banks may be mainly attributed to this defective regulation. Had the trade of banking been left as free in Ireland as in Scotland, the want of paper-money that would have arisen with the progress of trade, would in all probability have been supplied by joint-stock companies, supported with large capitals, and governed by wise and effectual rules.

In 1797, when the Bank of England suspended its payments, the same privilege was extended to Ireland; and after this period the issues of the Bank of Ireland were rapidly increased. In 1797, the amount of the notes of the Bank of Ireland in circulation was £621,917; in 1810, £2,266,471; and in 1814, £2,986,999.

These increased issues led to corresponding increased issues by the private banks, of which the number was fifty in 1804. The consequence of this increase of paper was its great depreciation; the price of bullion and guineas arose to ten per cent. above the mint price; and the exchange with London became as high as eighteen per cent., the par being 81/3. This unfavourable exchange was afterwards corrected, not by any reduction in the issues of the Bank of Ireland, but by the depreciation of the British currency in the year 1810, when the exchange between London and Dublin settled again at about par. (See Art. Exchange.)

The loss that Ireland has sustained by the failure of banks may be described in a few words. It appears, by the Report of the Committee on Irish Exchanges in 1804, that there were, at that time, in Ireland fifty registered banks. Since that year a great many more have been established, but the whole have failed, one after the other, involving the country from time to time in immense distress, with the following exceptions:—First, a few that withdrew from business; secondly, four banks in Dublin; thirdly, three at Belfast; and, lastly, one at Mallow. These eight banks, with the new Provincial Bank and the Bank of Ireland, are the only banks now (1827) existing in Ireland.

In 1821, in consequence of eleven banks having failed nearly at the same time, in the preceding year, in the south of Ireland, government succeeded in making an arrangement with the Bank of Ireland, by which joint-stock companies were allowed to be established at a distance of fifty miles (Irish) from Dublin, and the bank was permitted to increase its capital from 21/2 to 3 millions sterling. The Act 1 and 2 Geo. IV. c. 72, was founded on this agreement. But ministers having omitted to repeal in this Act various restrictions on the trade of banking that had been imposed by 33 Geo. II. c. 14, no new company was formed. In 1824, a party of merchants of Belfast, wishing to establish a joint-stock company, petitioned Parliament for the repeal of this Act of Geo. II.; and an Act was accordingly past in that session, repealing some of its most objectionable restrictions. (5 Geo. IV. c. 73.)

In consequence of this Act, the Northern Bank of Belfast was converted into a joint-stock company, with a (nominal) capital of £500,000, and commenced business on the 1st of January 1825. But the restrictions of 33 Geo. II., and certain provisions contained in the Acts 1 and 2 Geo. III., and 5 Geo. IV., obstructed its progress, and they found it necessary to apply to government to remove them; and a bill was accordingly introduced, which would have repealed all the obnoxious clauses of the 33 Geo. II., had it not been so altered in the committee as to leave several of them in force. In 1825 the Provincial Bank of Ireland commenced business with a (nominal) capital of £2,000,000; and the Bank of Ireland has of late established branches in all the principal towns.”

Since Sir Henry Parnell published the pamphlet from which we have taken the foregoing extract, several joint-stock banking companies have been founded in Ireland. The Provincial Bank, to which Sir Henry alludes, has a paid up capital of £540,000, and has been well and profitably managed. But others have been less fortunate. The Agricultural and Commercial Bank of Ireland, established in 1834, with 2170 partners, a paid-up capital of £352,790, and many branches, stopped payment during the pressure in November 1836, and by doing so involved many persons in great distress. It appears to have been extremely ill-managed. The auditors appointed to examine into its affairs, reported that “Its book-keeping has been found to be so faulty, that we are convinced no accurate balance-sheet could at any time have been constructed.” And they significantly added “the personal accounts at the head office require a diligent and searching revision.”

The Tipperary Joint-Stock Bank, which was established in 1839, and stopped payments in 1855, appears to have been little, if at all, better than a mere swindling engine. Luckily it did not issue notes; and the sphere of its operations was not very extensive. But, so far as its influence went, nothing could be worse, being ruinous alike to the majority of its partners and the public.

The existing Irish joint-stock banks, amounting to seven, have been all established between 1824 and 1836. We borrow principally from Thom’s Irish Almanac, the most valuable publication of its class, the following details with respect to the Irish banks in 1856:—